Binding Financial Agreements

Binding Financial Agreements

No one likes to think their relationship won’t last but a Binding Financial Agreement can offer peace of mind.

A ‘binding financial agreement’ (BFA), or ‘financial agreement’ involves some of the most complex and strict requirements in family law that they must be prepared by experienced family lawyers. The Family Law Act 1975 allows married, de facto relationships or same-sex relationships to enter into financial agreements that are legally binding (enforceable). To become legally binding, the Family Law Act sets out the following requirements:

  • Each party must have signed the agreement,
  • Received independent advice from a family lawyer about the effect of the agreement on your rights
  • Understand both the advantages and disadvantages of entering into the agreement.

A BFA agreement can be entered into at any point, including at the start, during or after a marriage or de facto relationship. Their primary purpose is to set out how assets and liabilities and other financial resources will be divided in the case of a relationship breakdown. It can also include spousal maintenance entitlements and adult child maintenance.

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    Specialists in Binding Financial Agreements

    How Can a Family Lawyer Help?

    Whether you’re organising a Financial Agreement early in a relationship or after divorce or separation, it requires a compassionate and skilled blawyer to handle the negotiation stage.

    Binding Financial Agreements require specialised family law expertise to ensure the BFA is binding. At Sage Family Lawyers, our experience and strength assists us in preparing BFAs quickly and sensitively.

    Sage Family Lawyers can assist you in:
    • Negotiations with the other party and preparation of your Binding Financial Agreement
    • Providing advice on the terms of a Binding Financial Agreement prepared by your partner
    • Negotiating on your behalf to ensure a Binding Financial Agreement meets your needs now and in the future
    • Making a Binding Financial Agreement in conjunction with a Court Order for more security
    • Amending, setting aside or terminating a Binding Financial Agreement due to changed circumstances, a mistake, fraud or duress

    We also provide written independent legal advice after reviewing your drafted financial agreement and answering your questions. Both parties are required to obtain independent legal advice from a legal practitioner that outlines the advantages and disadvantages of the agreement and their rights before signing. We can confidently advise you on your Binding Financial Agreement and ensure that it satisfies all legal requirements and meets the test of time.

    Frequently Asked Questions

    Are Binding Financial Agreements the Same as Prenuptial Agreements?

    Pre nuptial agreements, commonly referred to as prenups, are entered into before the commencement of the marriage or de facto relationship. These are often incorrectly referred to as binding financial agreements but they are different. The primary reason they are different is that a BFA can be entered into at any stage of the marriage or de facto relationship.

    Is It Worth Getting a Binding Financial Agreement?

    It depends on your situation, but a BFA is a good idea if you have children from a previous relationship, own property and other significant assets, have a good income, are likely to receive any significant gifts or inheritances in the future or are the beneficiary of a trust.

    A properly prepared binding financial agreement will provide financial security for both parties and prevent claims against each party in family court, saving both parties both time and money in the long run. Without a legal BFA, you and your ex-partner or spouse will need to negotiate a property settlement.

    What If My Partner Does Not Want A BFA?

    Both parties must consent for a financial agreement to be formed.

    What Are the Advantages and Disadvantages of Binding Financial Agreements?

    Our family lawyers will provide highly tailored legal advice based on your individual circumstances but here are some general advantages and disadvantages of BFAs to give you an idea.

    Advantages:

    • They act as a safety net by helping protect assets in de facto relationships and in marriages.
    • It provides certainty as to how property and assets will be divided. Both partners will know what will happen if the relationship ends and what property and assets they will retain.
    • Reduce the financial and emotional costs of potential family law proceedings post-separation
    • It is a much more efficient method to dividing property and assets. Settling in Court can take many months and this can be dragged out if former partners cannot reach agreement.
    • Ensures your children receive adequate financial support
    • Gives peace of mind & financial security in the event the relationship ends
    • Protects significant wealth
    • Safeguard potential inherited wealth

    Disadvantages:

    • Can be uncomfortable to raise the topic
    • It can cause mistrust or strain in the relationship as some individuals may view the agreement as a lack of faith in the relationship.
    • It extinguishes the right for both parties to approach the Court for a property settlement or spousal maintenance entitlements that differ from what is set out in the agreement.

    Can a Binding Financial Agreement Be Challenged?

    Yes, but challenging a binding financial agreement can be costly. However, there are certain circumstances where the Court may set aside a BFA.

    • The BFA was not drafted properly and does not comply with the Family Law Act 1975
    • The agreement was entered into under fraud or duress
    • A party entered into the agreement for the purpose of defrauding or defeating a creditor
    • Not all assets or relevant information was disclosed
    • Either or both parties have experienced significant changes in circumstances
    • There is a major change in the welfare and care of children
      • Once an agreement is set aside, both parties can apply to the Court for a property settlement.

        Our team of binding financial agreement lawyers can assist if you want to challenge the validity of a financial agreement (or, make sure your financial agreement stands).

    Is A BFA The Only Option to Protect Assets?

    There are other options, some de facto or married couples may choose to make an informal written or unwritten financial/property agreement but this is not legally enforceable in Court.

    The other option is to apply to the Court for consent orders. Couples can make a financial agreement and have it submitted for approval to the Court. If deemed fair, the Court will make a consent order. Consent orders just like binding agreements are very difficult to alter once they have been made, that’s why it’s essential to get expert advice from a family lawyer.

    Can a Financial Agreement Be Changed?

    Yes, to cancel or change a financial agreement both parties agree to enter into another agreement called a termination agreement. To become binding and enforceable, both parties must obtain legal advice.

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